Sydney Airport Holdings Ltd's (ASX: SYD) latest traffic results prove that not all infrastructure stocks are facing the same threat of rising bond yields.
The prospect of higher bond yields that's sparked by a lift in interest rates in the United States later this year has left some wondering if the outperformance of this class of stocks is about to come to a sudden and painful end.
This fear isn't extended to Sydney Airport today with the stock jumping over 1% in a flat market to $5.37 after management reported a 2.5% increase in passengers flowing through its airport in February, when compared to the same time last year.
Any income stock that can grow earnings will be more resilient to rising bond yields as it can increase its dividend.
This is certainly the expectation for Sydney Airport as it is well placed to benefit from the falling Australian dollar.
The weaker currency will make Australia a more attractive holiday destination for international travelers. At the same time, the unfavorable exchange rate and sluggish economy will encourage locals to opt for the more cost effective domestic holiday.
Inbound Chinese tourists are leading the charge with Sydney airport reporting a 23.7% surge in visitors from that country due to the Chinese New Year holidays, while Indian tourists are in second place with a 15.6% increase.
However, the locals are also fueling much of February's increase as domestic passenger numbers lifted 2.7%. Domestic passengers accounted for 65% of the total 3 million passengers that moved through Sydney's terminals in February.
Sydney Airport isn't the only one benefiting from this thematic. As Tim McArthur reported last month, Mantra Group Ltd (ASX: MTR) also delivered a robust interim result.
I have a feeling this trend will be playing out for some time. Although Sydney airport is one of a number of income stocks for investors to consider.
